Grains and Oilseeds: March corn closed at $7.36 ¼ per bushel, down $0.1525 on expectation that planting delays have ended in Argentina and rain improving crop conditions in Brazil. Stay out of corn. March wheat closed at $8.59 ½ per bushel, down $0.025 and for the week lost 0.3% on long liquidation. We prefer the sidelines in wheat as well. March soybeans closed at $14.72 per bushel, down $0.14 also tied to resumption of planting in Brazil. We are awaiting fresh fundamentals before entering the long side of soybeans again.
Meats: February cattle closed at $1.3045 per pound, down 57.5 points on choppy trading and remains centered in the 133 and 128 price level. We could see further price gains tied to the recent aggressive herd marketings as feed prices gained. However, we would look to buy calls on any price decline tied to the dollar. February hogs closed at $0.8355c per pound down 90 points and lost 0.4% for the week. Weak demand for ham as retailers had already completed their Christmas holiday purchases. Stay out for now.
Coffee, Cocoa and Sugar: March coffee closed at $1.5280 per pound, up $0.0185 on short-covering after trading at a 2 ½ year low earlier in the week. We like coffee from here but only on call purchases. March cocoa closed at $2,409 per tonne, down $11 tied to expectation for a large global surplus in 2012/13. We prefer the sidelines in cocoa for now but with a watchful “eye” on African producers. March sugar closed at $0.1918 per pound, down 18 points on heavy volume and concern over excess supplies. Higher Brazilian output, the world’s top producer is expected to add to the global surplus. We prefer the sidelines but would hold long call positions for now.
Cotton: After trading as low as $0.6979 recently, short-covering has brought prices up to $0.7380 per pound with Friday’s gain of 25 points. According to the International Cotton Advisory Committee in its first forecasts for the 2013-14 year which starts next August, estimates for world cotton production could fall by 11%. After trading as high as $0.78 per pound in August and retreating the $0.71 level in early October, prices have seen a bounce to $0.76 and another drop to the recent $0.6979 low before basing and starting up again. With the technical support as well as positive production estimates we could see further price gains and would purchase calls on any weakness.